Oklahoma Casinos Doing Good

keno1440 · **keno1440**

Casinos thrive in Oklahoma while 3 of Kansas' 4 gaming zones are empty

BY FRED MANN
The Wichita Eagle

Casino hotel towers are beginning to loom over the landscape. But that landscape isn't in Kansas. It's in Oklahoma, where tribal casinos are outgrowing their truck-stop image. Several have become the lavish destination resorts Kansas thought it was getting when lawmakers passed an expanded gaming bill in 2007.

While Kansas waits for a new round of proposals after the sinking economy wiped out casino plans in Sumner County and elsewhere, Oklahoma tribes that secured financing before the credit markets tightened have been building new hotels, restaurants, golf courses, entertainment and convention centers, and more to lure gamblers from wide distances.

Kansas Lottery director Ed Van Petten doesn't think the growth south of the state line would hurt a project in Sumner or Wyandotte counties.

"Right now it's more an economic problem than a competition problem," Van Petten said.

But Oklahoma's expanded casinos are going after Kansas gamblers.

The Cherokee Casino Resort in Catoosa, east of Tulsa, is completing a $155 million expansion and rebranding itself as a Hard Rock casino to draw out-of-staters and build customer loyalty while Kansas stands still.

"We're leveraging that customer base to increase it and gain more market base and reach out further away from the casino," said David Stewart, chief executive of Cherokee Nation Enterprises.

The Quapaw Tribe's $301 million Downstream Casino Resort in northeast Oklahoma, which forced casino developer Penn National Gaming to give up on building a casino in nearby Cherokee County in Kansas, opened a large hotel in July with five restaurants, an outdoor concert venue and a 36-hole golf course.

It plans a second phase that will include another hotel. And officials are thinking of expanding into Cherokee County, where the tribe owns several hundred acres. The Kansas state line is only 65 feet from the Downstream's entrance.

The tribe won't rule out the possibility of bidding for a Kansas casino.

"I think it's always possible, but we're not making a big commitment or effort to get there," said John Berrey, Quapaw tribal chairman and chairmanof the Downstream Development Authority, which owns and operates the property for the tribe.

"We're just sort of looking at every possibility," he said.

Berrey doubts any outside company will make a bid for a Cherokee County casino by April 21, a new deadline set by the Kansas Lottery after no one applied by the Jan. 21 deadline.

A bill is being drafted in the Legislature to reduce the minimum investment in that zone from $225 million to $50 million, the amount required for the Dodge City casino.

As landowners in Cherokee County, the tribe regretted that Penn pulled out and that no one seems interested in building a casino next door, Berrey said.

"It would add to our customer base, and we think it would be a lot of fun," Berrey said.

The Downstream was built as a luxury destination resort to draw from a four-state area. It includes new video-game technology, a ventilation system that clears the casino air of smoke, and a 12-story, 222-room hotel that features high-end linens.

Its 1 million square feet of casino and hotel space is covered by carpeting made in Ireland.

Oklahoma's thriving casino business

In Catoosa, the Cherokee Casino Resort has added 30,000 square feet to its casino floor for 800 new slot machines and an 80-foot-long bar made of solid ice.

In the spring, it will become the only Hard Rock casino in the Midwest. It will open a 19-story, 200-room hotel consisting primarily of luxury megasuites, a multipurpose theater and events center, a convention center and a Toby Keith restaurant.

In Tulsa, the Creek Nation is building a $195 million casino next to its old one. The first phase, due to open in March, will include 2,800 slots, 24 table games and several restaurants. The second phase will include a hotel and a 2,500-seat convention center.

On Oklahoma's southern state line, the Chickasaw Nation'sWinStar World Casino in Thackerville has doubled the size of its casino floor to 519,000 square feet and tripled the number of slots to 5,800.

Tribal casinos immediately south of the Kansas state line are smaller than destination casinos, but the Pawnee Nation still is considering plans for a resort on 800 acres near Chilocco, south of Arkansas City. Plans include 1,200 slots, 24 tables, multiple restaurants and bars, a 150-room hotel, a golf course, and an events and entertainment center.

A casino at Chilocco would take revenue from a Sumner County casino, according to consultants hired by the state of Kansas during the first round of bidding.

Will Cummings, of Cummings Associates, projected a Chilocco casino would cut revenue by $10 million a year at a Wellington casino and by $6.7 million a year at a Mulvane casino.

Christianson Capital Advisors estimated the Chilocco facility would trim $10.5 million from revenue in Wellington and $4.2 million from a Mulvane casino.

Oklahoma casinos generated $2.5 billion in revenue last year, a 22.3 percent increase over the previous year, according to Casino City's Indian Gaming Industry Report.

They have been thriving in recent years after being allowed to use Las Vegas-style slots in addition to bingo-based games.

Disparity between Kansas and Okla.

Although the gambling business began slumping this fall in Vegas and elsewhere, it has only leveled off in Oklahoma, Stewart said. The state has been somewhat insulated from economic turmoil by the oil and gas industry. And it is benefiting from local and regional gamblers who would rather drive to a casino than fly to Las Vegas these days.

Still, Stewart said, "We're not seeing the significant increases we saw in the last few years. The 30 to 40 percent (revenue) increases are over. That's when plans for growth flourished."

But the tribes also benefit by having to pay only 6 percent of their gaming revenue to the state of Oklahoma in the form of gaming compact fees.

The managers of Kansas' state-owned casinos will have to pay 22 percent in taxes to the state and more to local governments.

That will provide a huge competitive advantage to Oklahoma casinos, because they will have much more cash to pump back into their facilities and operations, Stewart said.

The disparity was a factor cited by Penn National Gaming when it fled the shadow of the Downstream casino.

Van Petten acknowledged that it will be difficult to find a bidder for the Cherokee County zone because of the Quapaw casino.

But the other zones should be fine, he said.

"I think the south-central and northeast zones can pretty much stand on their own, based on the business and tourism interests in close proximity, as well as south-central being on the main thoroughfare, I-35," Van Petten said.

The economic downturn and tight credit markets are expected to result in scaled-down, phased-in proposals for Kansas.

While bidders in Sumner and Wyandotte counties will have to meet the mandated $225 million minimum investment, their proposals, due at the lottery by April 1, aren't likely to be in the $500 million to $700 million range originally proposed for those counties.

Stewart said people are used to lavish facilities after such a boom in casino growth.

"You're not going to be able to go in and build something that is substandard, and really compete for a destination casino," he said.

His casino near Tulsa started as an $80 million facility, grew as the market dictated, and now has a total investment of $250 million.

Stewart doesn't fret that new casino resorts may be coming to Sumner and Cherokee counties.

"That would generate a new gaming market that would probably travel to our property and not significantly take away from our market," he said. "So I'm not really scared of those properties going in. It sometimes helps."

Brianzz · **Brianzz**

It seems the gamblers are opting to play locally instead of traveling to places like Vegas, AC and Tunica. All those citys number continue to down down down.
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LunaToon · **LunaToon**

Good article Keno, it does as Brian says, point out the fact that gamblers would rather stay local these days. It makes sense, you can go for shorter period of times, and more frequently. I don't think it would have as big an impact on Tunica or even Atlantic City as they have a huge local population to pull from. Las Vegas however is pretty much a fly in destination.

Georgia is talking (again) about legalizing casinos since they know they are losing revenue to Mississippi and North Carolina, and in this ecomony it would probably be a smart move. The news was reporting that lottery sales have jumped way up in the past 6 months and I think it's because it's the only way for folks to gamble without going out of state to a casino. So people are saving a lot of money NOT going to casinos and probably feel buying more lottery tickets is still cheaper then the alternative!

Interesting stuff.

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LunaToon
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Jean · **Jean**

I agree with all of you on more people gambling local. With the higher cost of flying added to a trip to Vegas, I can add that to my gambling budget in Tunica.

Illinois is taking a beating from neighboring states since they went smoke free here in Illinois casinos.

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